ARTICLES (1498 1507)

Art. 1477: The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. Art. 1496: The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. Art. 1497: The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee. WAYS OF EFFECTING CONSTRUCTIVE DELIVERY 1. EQUIVALENT TO ACTUAL DELIVERY Constructive or Legal delivery is equivalent to actual delivery. It may be effected in any of the following ways. a) b) c) d) e) f) By execution of a public instrument (Art. 1498) By symbolical tradition or traditio symbolica (Ibid.) By traditio longa manu (Art. 1499) By tradition brevi manu (Ibid.) By tradito constitutum possesorium (Art. 1500) By Quasi- tradition

(Article 1498, par. 1) Execution of public instrument Exceptions: i. when there is stipulation to contrary, execution does not produce effect of delivery ii. when at the time of execution of instrument, subject matter was not subject to control of the seller. ii.i subject matter should be within control of seller; he should have capacity to deliver at the time of execution of public instrument when he wants to effect actual delivery (Art. 1498, par. 2.) Symbolic delivery with regard to movable property, delivery may be effected by the delivery of the keys of the place or depository where it is stored or kept. QUESTIONS. 1. A and B entered into a contract whereby A engages to deliver his car to B, and B to pay a price therefor in the amount of P50k. They executed a public instrument. Was there a delivery of the car? 2. A sold B a parcel of land. They executed a public instrument. However, B lost his copy of the instrument. Was there a delivery of the land? 3 A sold B a parcel of land at P500k. The sale is not evidenced by a public instrument, but B took possession of the land after their agreement. When B died, his heir, C, took possession of the land. A contended that he is still the owner of the land as there was no delivery of the land to B, and that the contract was unenforceable pursuant to the statute of frauds. Rule the case. Art 1499 Traditio longa manu Delivery of thing by mere agreement; when SELLER points to the property without need of actually delivering (as when the thing sold cannot be transferred to the possession of the vendee at the time of sale). Traditio brevi manu Before contract of sale, the would-be buyer was already in possession of the would-be subject matter of sale (e.g. as lessee), and pursuant to sale, he would now hold possession in the concept of an owner.

Art. 1500 Traditio constitutum possessorium at the time of perfection, the seller held possession of the subject matter in the concept of owner, and pursuant to the contract, the seller continues to hold physical possession thereof as lessee or other form of possession other than the concept of owner. Art 1501 Quasi- tradition Incorporeal Property is a legal right in property having no physical existence e.g patent rights, lease or mortgage, trademark, copyright In the case of incorporeal things, delivery is effected 1. 2. 3. By the execution of public instrument When that mode of delivery is not applicable, by the placing of titles of ownership in he possession of the vendee By allowing the vendee to use his right as a new owner with the consent of the vendor.

Constructive delivery requires three things before ownership may be transferred: 1. 2. 3. The seller must have control over the thing The buyer must be put under control There must be the intention to deliver the thing for purposes of ownership

Sale or return

Property is sold, but the buyer, who becomes the owner of the property on delivery, has the option to return the same to the seller instead of paying the price.

NOTES:

It is a kind of sale with a condition subsequent. The buyer must comply with the express or implied conditions attached to the return privilege; otherwise, the sale becomes absolute. Buyer, being the owner, bears the risk of loss

Sale on trial, approval, or satisfaction

A contract in the nature of an option to purchase if the goods prove to be satisfactory, the approval of the buyer being a condition precedent.

1. 2. 3. 4.

Rules: title remains in the seller risk of loss remains with seller except when the buyer is at fault or has agreed to bear the loss buyer must give goods a trial, except where it is evident that it cannot perform the work period within which buyer must signify his acceptance runs only when all the parts essential for the operation of the object have been delivered.

5. 6.

if it is stipulated that a third person must satisfy approval or satisfaction, the provision is valid, but the third person must be in good faith. If refusal to accept is not justified, seller may still sue. Generally, the sale and delivery to a buyer who is an expert on the object purchased is not a sale on approval, trial, or satisfaction.

Sale or return 1. Subject to a resolutory condition 2. Depends entirely on the will of the buyer

Sale on Trial 1. Subject to a suspensive condition 2. Depends on the character or quality of the goods

3. Ownership passes to the buyer on delivery and subsequent return reverts ownership in the seller

3. Ownership remains in the seller until buyer signifies his approval or acceptance to the seller

4. Risk of loss or injury rests upon the buyer

4. Risk of loss remains with the seller

Art. 1503 Instances where Seller is still the Owner despite Delivery: 1. 2. 3. Sale on trial, approval or satisfaction Contrary intention appears by the term of the contract; Implied reservation of ownership (Article 1503) a. b. c. If under the bill of lading, the goods are deliverable to seller or agent or their order; If the bill of lading, although stating that the goods are to be delivered to the buyer or his agent, is kept by the seller or his agent; When the buyer, although the goods are deliverable to order of buyer, and although the bill of lading is given to him, does not honor the bill of exchange sent along with it.

Transfer of ownership where goods sold delivered to carrier General Rule: Delivery to the carrier is deemed to be delivery to the buyer Exception: Where the right of possession or ownership of specific goods sold is reserved

Art 1503 (par. 4) The title is regarded as retained in the seller until the bill of exchange is paid. The fact that the bill of lading and a bill of exchange are attached together indicates that the seller intends to make the delivery of the goods conditional upon the payment or acceptance of the draft. The buyer is bound to return the bill of lading if he does not honor the bill of exchange. If he wrongfully retains the bill of lading. He acquires no better right thereby. As regards third person, if bill of lading provides: 1. 2. 3. 4. Goods are deliverable to buyer Goods are deliverable to the order of the buyer Is indorsed in blank Is indorsed to the buyer by the consignee named therein

Third person will obtain ownership to the bill of lading or goods from the buyer provided that he: 1. 2. 3. Art 1504 Unless otherwise agreed. Goods remain at the sellers risk until ownership therein is transferred to the buyer When ownership therein is transferred to the buyer the goods are at the buyers risk Purchase it in good faith For value Without notice of fact making the transfer wrongfully

EXCEPTION 1. Where delivery of goods has been made to the buyer or to a bailee for the buyer and ownership of the goods is retained by the seller merely to secure performance by the buyer. Goods are at the buyers risk from the time of such delivery If actual delivery is delayed by either the buyer or the seller Art. 1505 SALE OF GOODS BY A NON-OWNER Goods are at the risk of the part in fault

2.

GENERAL RULE: Buyer acquires no title even if in good faith and for value under the maxim Nemo dat quid non habet (You cannot give
what you do not have).

EXCEPTIONS:

1. 2. 3. 4. 5. 6.

Owner is estopped or precluded by his conduct When sale is made by the registered owner or apparent owner in accordance with recording or registration laws Sales sanctioned by judicial or statutory authority Purchases in a merchant's store, fairs or markets When a person who is not the owner sells and delivers a thing, subsequently acquires title thereto (Art. 1434) When the seller has a voidable title which has not been avoided at the time of the sale (Art. 1506)

Application of Article 559 Art. 559 provides for the right of recovery of the real owner of the movable property - If the real/previous owner of a movable property has lost it or is unlawfully deprived of it, he may recover it from the person who possesses the same without reimbursement, notwithstanding the good faith of the latter. - If, however, the person who possesses the movable property has acquired the same in good faith at a public sale, the owner has to reimburse him in order to recover the property. Public Sale is defined as one where there has been a public notice of sale in which anyone is allowed to bid for the object he desires to buy. Art 1506 SALE WITH A VOIDABLE TITLE As aforementioned, the seller need not have the title to the goods at the time of perfection of the contract. However, he must have the title at the time of delivery. Art. 1506: Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title. If title has not been avoided, buyer acquires good title if he acquires them (a) in good faith; (b) for value; and (c) without notice of the sellers defect of title

QUESTIONS. 1. A owns a Rolex watch. B stole As watch, and sold the same to C. C does not know that the watch was stolen and he bought t he same from B for value. May A recover the watch from C? 2. A owns a Rolex watch. B stole As watch, and sold the same to C. C knows that the watch was stolen and he bought the same from B for value. May A recover the watch from C? 3. Given the same facts in Question #2 only that B sold the watch at a public sale, where C, the highest bidder, was the one who was able to purchase the watch. C, however, knows that the watch was stolen. If A has the right to recover as stated in #2, should he reimburse C in recovering the watch? 4. A owns a Rolex watch. B stole As watch, and pawned the same to Villarica Pawnshop. For failure to p ay the loan, Villarica Pawnshop sold the watch at a public auction. C was the one who bought the watch. Rule the case. 5. A owns a Rolex watch. B stole As watch, and sold the same to C, a merchants store. D, who does not know that the watch w as stolen, bought the same from C. May A recover the watch from D? 6. A owns a Rolex watch. B stole As watch, and sold the same to C, a merchants store. D, in bad faith, purchased the watch from C. May A recover the watch from D? 7. A owns a Rolex watch. B stole As watch, and sold the same to C, a seller of bagoong. D saw the watch from the bagoong -seller while he was buying a bagoong. Without knowing that the watch was stolen, he offered to buy the same from C. C accepted the offer. Th ereafter, D bought the watch from C for P5k. May A recover the watch from D? 8. A owns a Rolex watch. B stole As watch, and sold the same to C. C sold the same at ebay. D, in good faith, bought the wat ch. May A recover the watch from D?